Strong US economy vital, George Osborne tells China

George Osborne today backed America's financial policies after criticism from emerging economies, saying a strong US was in the world's, and Asia's, interests.

The Chancellor, speaking in Hong Kong after meeting Chinese officials ahead of the G20 summit in South Korea, called on countries to resist protectionism and to reduce trade barriers.

China has been blunt in its criticism of America's loose monetary policies, through which it plans to pump another $600 billion into its economy, warning that Washington could destabilise the global economy and inflate asset bubbles.

Osborne has said the G20 talks need to improve co-operation to reduce trade imbalances, and today David Cameron warned that globalisation could "go into reverse" unless China allowed faster appreciation of its yuan currency.

The Prime Minister said the massive surpluses created by China's export success had created "a dangerous tidal wave of money" sweeping around the world.

His warning came in a speech to students at Peking University in which he also risked infuriating Chinese authorities by extolling the virtues of political democracy and a free press. He said he hoped China would develop towards "a greater political opening".

Cameron said: "The rise in economic freedom in China in recent years has been hugely beneficial to China and to the world.

"I hope that in time this will lead to a greater political opening, because I am convinced that the best guarantor of prosperity and stability is for economic and political progress to go in step together."